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Trump’s attacks further complicate U.S.-Canada trade ties

By Sheetal Sukhija, Philadelphia News
14 Jun 2018, 02:01 GMT+10

WASHINGTON, U.S. - Following his meeting with the North Korean leader Kim Jong Un on Tuesday, the U.S. President Donald Trump against turned his focus on the fractious meeting of the Group of Seven industrialized nations (G7) and his exclusive target at that meeting - the Canadian Prime Minister Justin Trudeau.

The G7 meeting in Canada concluded on a sour note for all sides involved over Trump’s recent imposition of steep metal tariffs, citing national security reasons.

Last month, U.S. announced that it will levy tariffs of 25 percent on imported steel and 10 percent on imported aluminum, angering some of America’s closest allies, who have threatened to retaliate.

At the meeting, G7 leaders including the German Chancellor Angela Merkel, the Canadian Prime Minister Justin Trudeau, the French President Emmanuel Macron and others confronted Trump over the tariff threats.

And despite some disagreements and tense moments, the group managed to put on a show of unity until the very end - when things took a turn for the worse.

Trump tweeted at the end of the summit, “Just left the @G7 Summit in beautiful Canada. Great meetings and relationships with the six Country Leaders especially since they know I cannot allow them to apply large Tariffs and strong barriers to......U.S.A. Trade. They fully understand where I am coming from. After many decades, fair and reciprocal Trade will happen!”

A while later, he tweeted, “The United States will not allow other countries to impose massive Tariffs and Trade Barriers on its farmers, workers and companies. While sending their product into our country tax free. We have put up with Trade Abuse for many decades — and that is long enough." 

It all went downhill hours later, when the Canadian leader vowed to press ahead with retaliatory measures on July 1 at a press conference, while Trump was enroute to Singapore.

Trudeau said, "I have made it clear to [President Trump] that it is not something we relish doing, but it is something that we absolutely will do. Canadians are polite and reasonable but we will also not be pushed around.”

He added that Trump’s decision to invoke national security to justify U.S. tariffs on steel and aluminium imports was “kind of insulting” to Canadian veterans who had stood by their U.S. allies in conflicts dating back to World War I.

Trudeau added that he told Trump “it would be with regret but it would be with absolute clarity and firmness that we move forward with retaliatory measures on July 1, applying equivalent tariffs to the ones that the Americans have unjustly applied to us.”

Taking immediately offense to the Canadian leader’s statement, Trump and two of his advisers lashed out at Trudeau, with the U.S. President accusing the Canadian Prime Minister of engaging in "bad faith diplomacy” and making "false statements.”

Trump then declared that he was retracting his endorsement of the G7's joint communique.

He tweeted, “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!”

Further, Trump’s top economic adviser Larry Kudlow accused Canada of making “polarising” statements about the U.S. trade policy.

He called Trudeau's press conference a "sophomoric, political stunt for domestic consumption,” and said that the Canadian Prime Minister had “stabbed us in the back.”

Then, Trump’s trade adviser Peter Navarro also attacked Trudeau and said, "There is a special place in Hell for any leader that engages in bad faith diplomacy with President Donald J Trump and then tries to stab him in the back on the way out the door."

Trump tweeted that Trudeau was “dishonest and weak.”

Trudeau’s office, in response, issued a statement clarifying that he had "said nothing he hasn't said before - both in public, and in private conversations with the president" and vowed to abide by the G7 final communique.”

Adding, “We are focused on everything we accomplished here at the G7 summit. The Prime Minister said nothing he hasn’t said before—both in public, and in private conversations with the president.”

Baffled at Trump's outburst, other G7 members banded together and pledged to support the communique which said that the other G7 members had agreed on the need for "free, fair, and mutually beneficial trade" and the importance of fighting protectionism.  

Making matters worse

Following his Singapore summit, Trump again doubled down on Trudeau and warned him that his stance on trade discussions was a “mistake” that would cost Canada “a lot of money.”

Trump’s comments dashed hopes for a swift resolution of the U.S.-Canada trade row which has helped push relations between the two countries to their lowest point in recent memory.

Analysts have warned that the intensifying trade dispute between the two countries may lead to economic hardships on both sides.

They further warned that the U.S. president’s next target could be the country’s automotive sector, a move that would further punish Canada.

However, such a move would also unleash a cascade of economic consequences on both sides of the border.

According to Eric Miller, an economist and global fellow at the Canada Institute at the Woodrow Wilson Center, “What you’re essentially talking about is dropping a nuclear bomb in middle of the North American industrial economy and waiting for the consequences to play out.”

Previously, Trump has floated the idea of implementing a 25 percent tariff on automobiles coming across the Canadian border. 

A pre-emptive attack on the Canadian automobile manufacturing network, which is the largest supplier to the U.S., would have lasting effects for Americans.

Miller warned, “You are looking at direct and indirect employment in the sector of hundreds of thousands of people in Canada and millions of people in the United States.”

He noted that every job in the automotive sector creates an estimated seven peripheral jobs. 
According to Miller, the proposed tariff would add an additional $6,250 to a $25,000 car.

Meanwhile, other nations affected by Trump’s metal tariffs, including Japan, Mexico and the European Union too have threatened to retaliate, which analysts warn could cause equivalent price spikes for American consumers and ripples that could morph into waves throughout the economy.

Patrick Leblond, an international trade expert at the Centre for Internal Governance Innovation pointed out, “The United States can inflict a lot of damage on the Canadian economy. But the reality is that by doing so, it would inflict damage upon itself.”

Leblond added, “At some point, something’s got to give. And when Americans start losing their jobs, they’re going to go back to their senators and say: ‘What are you doing about this? We just lost our jobs and it’s because of Trump’s policies.’”

Michael Gregory, deputy chief economist at BMO World Markets meanwhile pointed out, “Canada and the United States have one of the largest trading relationships in the world and amid that, one of the most balanced trading relationships.”

Meanwhile, following Trump’s spat with Trudeau, Canada's Foreign Minister Chrystia Freeland shrugged off the comments, saying the country "expected moments of drama" when it came to matters of trade with the Trump administration.

She added, “Canada is prepared for any eventuality" and are ready with "a plan B, C, D and F and maybe to the end of the alphabet" if relations continue to sour.

The impact of the recent spat are also likely to affect the ongoing renegotiating the 1994 North American free Trade Agreement (Nafta), which officials from Canada, the U.S. and Mexico are engaged in simultaneously.

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